How I identified $2M in sales tax exposure, built executive alignment around an uncertain compliance issue, and led a cross-functional implementation to convert a growing liability into a structured operating process.
Chairish was a rapidly growing Series A marketplace for vintage and high-end furniture. As the company expanded, transactions were taking place across a growing number of states — each with different sales tax requirements.
For much of the company's early history, sales tax compliance had not been a major operational priority. The business was smaller, marketplace tax rules were still evolving, and the company had limited internal resources dedicated to tax. That changed as transaction volume and geographic reach increased. What had once been a manageable issue was becoming a material financial and operational risk.
We identified that Chairish may have developed sales tax obligations in multiple states without the infrastructure required to consistently calculate, collect, file, and remit the appropriate taxes.
Determining the company's exposure was difficult. Transaction data had not originally been structured to support a state-by-state tax analysis. Historical sales information was spread across systems, state requirements were changing, and it was not immediately clear where Chairish had crossed the thresholds that could create a filing obligation.
The project also required more than a tax interpretation. Any solution would affect the customer checkout experience, transaction calculations, marketplace reporting, accounting processes, historical data, state registrations, tax filings and remittances, customer-service workflows, and engineering priorities. Finance could not resolve the issue independently.
Based on our initial assessment, Chairish faced approximately $2 million in potential taxes, penalties, and related exposure if the company did not address the issue.
The financial risk was only one part of the problem. Unresolved tax exposure could also complicate a future equity or debt fundraise, create issues during investor or acquisition diligence, reduce confidence in the company's financial controls, and lead to penalties and interest that increased over time.
Despite these risks, the appropriate level of urgency was not immediately obvious to everyone. Chairish was a growing startup with limited engineering capacity and competing product priorities. Some executives viewed the tax issue as an immediate financial risk. Others questioned whether it justified diverting engineering resources from customer-facing growth initiatives. My responsibility was to turn an uncertain compliance issue into a business decision the executive team could evaluate.
I worked with accounting, tax advisers, data, and other internal stakeholders to reconstruct the company's historical transaction activity by state — understanding both the volume of transactions and the periods in which they occurred. The analysis required us to identify which states had meaningful transaction volume, when the company had potentially crossed applicable thresholds, which transactions were subject to tax, and what penalties or interest could apply.
The analysis was complicated by gaps and inconsistencies in historical data. Rather than waiting for perfect information, I structured the analysis around ranges and scenarios. This gave the executive team a realistic view of the potential exposure while clearly identifying which assumptions still needed to be validated.
A potential $2 million exposure was significant, but the number alone was not enough to determine the right course of action. I developed a strategic plan that compared the available paths forward: continuing with manual processes, building tax functionality internally, using outside advisers, and implementing a third-party compliance platform.
I evaluated each option across financial exposure, implementation cost, engineering requirements, speed to compliance, scalability, ongoing administrative effort, reliability of tax calculations, and impact on the customer experience. The analysis made clear that manual processes would become increasingly difficult to maintain as Chairish grew, and that building a complete internal solution would require substantial engineering time and ongoing updates as state requirements changed.
Based on this assessment, I recommended implementing Avalara.
The executive team did not initially agree on how urgently the company needed to act. The project competed with revenue-generating initiatives for limited engineering resources, and there was genuine uncertainty about the exact amount of historical exposure.
To build alignment, I separated what we knew from what we were still validating — presenting the estimated range of financial exposure, the states creating the greatest risk, the costs of waiting, the engineering resources required, and the risks that Avalara could and could not eliminate.
The executive team approved the project and aligned on implementation as a company priority.
I led the evaluation of Avalara as the company's marketplace tax-compliance platform. The solution needed to support state-specific tax calculations, customer address validation, state registration requirements, transaction reporting, filing and remittance, refunds and canceled orders, historical data requirements, reconciliation with the general ledger, and changes in tax rules over time.
I worked with accounting and outside advisers to define the tax requirements, then translated those requirements into a plan that product and engineering could evaluate.
The technical integration was more difficult than initially expected. Tax calculations needed to occur within the customer transaction flow, but Chairish's marketplace model included different product types, seller locations, buyer locations, shipping arrangements, discounts, cancellations, and refunds. The engineering team needed precise rules for how the tax engine should interact with each transaction.
I coordinated the work across executive leadership, accounting and finance, tax advisers, engineering, product, data analytics, customer support, and Avalara's implementation team. My role was to maintain the overall strategy and decision framework while ensuring that individual workstreams stayed connected — developing the project plan, clarifying ownership, tracking open decisions, and escalating issues that could delay the launch.
Because engineering resources were constrained, I helped break the implementation into manageable phases — prioritizing the jurisdictions and transaction types that created the greatest exposure, while building a process that could expand as the company's obligations evolved. This allowed Chairish to address the most material risks first rather than waiting for every historical and technical question to be resolved.
A successful launch would not eliminate the need for ongoing compliance. I worked with the relevant teams to establish ownership and reporting expectations across monitoring state obligations, reviewing tax calculations, reconciling amounts collected and remitted, managing exceptions, coordinating filings, and escalating system errors — so that the solution would remain operational after the initial implementation.
Chairish successfully implemented Avalara and established a more scalable process for calculating, collecting, reporting, and remitting marketplace sales taxes. Additional outcomes included:
The implementation converted an uncertain and growing liability into a structured operating process.
Compliance issues at a startup rarely remain confined to finance or legal. A tax requirement can quickly become a product, engineering, data, accounting, customer-support, and executive-prioritization problem. Solving it requires someone who can understand the financial risk, translate it into operational requirements, and align teams that have different incentives and priorities.
I also learned that executive alignment does not require eliminating every uncertainty. The historical data was imperfect, state rules were evolving, and the exact exposure could not be known with complete precision at the beginning of the project. My role was to create enough structure around the uncertainty for leadership to make a responsible decision — separating known facts from assumptions, quantifying the range of possible outcomes, identifying the cost of waiting, and proposing a phased solution.
At an early-stage company, risk management should not mean slowing the business down. Done well, it gives the company the infrastructure and confidence to keep growing.
